Payday loans and Title loans are two different types of loans that may be able to help you if you are stuck in a situation where you have experienced unexpected costs. Both payday loans and title loans are short term loans that allow you to borrow money online in order to help you manage expenses until your next payday.
Which one is more suitable for you will depend on your current circumstances; this guide takes you through what title loans are, the benefits of title loans and the differences between title loans and payday loans.
Payday loans and title loans both have their merits as they can help people with bad credit afford a loan that they might need in order to pay emergency medical bills or car repairs until they can afford to repay their loan.
What Are Title Loans?
Title loans are a type of secured loan, which use the borrower’s vehicle as collateral for the loan. This means that if you fail to repay your title loan on time, your car can be repossessed and therefore taken away from you. Often, a primary consideration will be whether you need to borrow a larger amount for example such as in the case of a $1000 loan or if you need to borrow $1500. If you need to borrow a smaller amount of money, an unsecured loan may be less risky and more more preferable.
The amount of money that you will be able to borrow depends on the value of your vehicle. A more expensive vehicle the more money you can borrow as your vehicle is used as the collateral.
During the period of a title loan, the lender will hold the car title and the collateral until the loan is fully repaid. Of course, you are still able to drive your car throughout the time you are borrowing with a title loan. Repayments can be done in several different ways with Title Loans including precise repayments over a period of months in instalments or one lump sum.
What Are The Benefits of Title Loans?
Title loans, much like payday loans online and other forms of loan and finance, come with a range of benefits as well as pitfalls which borrowers should always be aware of before committing to a loan arrangement. You should also always ensure you are able to repay the money you borrow plus any interest, as failing to do so will lead to you damaging your credit score and reducing your chances of being able to get finance or loans in the future.
Easy to Qualify for Title Loans
Most people will be accepted for a title loan even if they have bad credit. There are usually no credit checks taken in the title loan application process all you need is to own a vehicle, a regular monthly income and state-issued identification.
Online Applications for Title Loans
Like a payday loan you can easily apply for a title loan online. Many lenders will offer title loans with just a simple online application form from your computer of cell phone. It doesn’t matter whether you need to borrow $400 or borrow $4000, a title loan, being secured on your vehicle may be able to provide you with the money you need in the form of a secured loan.
Approved on Application Date
Title Loans like payday loans are able to be into your bank account within 1 working day of submitting your application, therefore if you are desperate then doing a title loan can help you get the money into your account quickly. You can also get an instant decision when it comes to title loans which means that you will know straight away whether or not you are accepted, without having to wait longer than a few minutes.
Title loans will usually be deposited in full into your bank account once you have signed the contract. This makes it much easier to solve any of your emergency financial needs when you sign up for the loan.
No Borrowing Limits
There is limitation on the amount you can borrow from your lender, it is all dependent on the value of your car. You will borrow $1000 if your car is worth that much but if your car is worth a lot more you will be able to borrow that much as well.
What is the Difference Between Title Loans and Payday Loans?
The main difference between a title loan and a payday loan is that payday loans are secured whereas payday loans are unsecured loans. Title loans use your vehicle as collateral if you cannot repay your loan whereas in payday loans there is no collateral.
Moreover, the amount you can borrow on a title loan is dependent on the amount that your car is worth. These types of loans will usually come with a lower APR than payday loans however if you fail to repay your loan your car can be repossessed.
If you are thinking about taking out a car title or payday loan you must make sure you are able to make repayments as there can be consequences if you do not repay your loan on time.
Should I Get A Title Loan or a Payday Loan?
Whether you should get a title loan or a payday loan depends on your situation. If you own a car and are willing to use it as collateral then a title loan might be the way forward, especially if you want to borrow larger amounts of money.
Payday loans are usually smaller amounts of money including borrowing $100.
However, if you do not own a car or are looking for a quick and easy short-term loan without having to put a valuable asset at risk than a payday loan could be for you. Make sure you think about all options before applying for a loan.